Oil prices experienced an uptick for the third consecutive day on Thursday, driven by escalating apprehensions regarding a potential military strike by the U.S. on Iran, a significant producer in the Middle East, which could lead to disruptions in supply from the area. Brent crude futures increased by 50 cents, representing a 0.73% rise, reaching $68.9 per barrel by 0216. Meanwhile, U.S. West Texas Intermediate crude saw an uptick of 58 cents, or 0.92%, bringing it to $63.79 per barrel. Both contracts have increased approximately 5% since January 26 and are currently at their peak since September 29.

Prices are on the rise as U.S. President Donald Trump intensifies pressure on Iran to terminate its nuclear program, accompanied by threats of military action, while a U.S. naval group has positioned itself in the region. Iran ranks as the fourth-largest producer within the Organization of the Petroleum Exporting Countries, with a production level of 3.2 million barrels per day. Trump is contemplating strategies to target Iranian security forces and leaders in an effort to incite protests that could lead to the potential overthrow of the existing regime, as reported by Reuters on Thursday, referencing U.S. sources knowledgeable about the discussions.

Analysts noted on Wednesday that the potential for Iran facing military action has increased the geopolitical premium on oil prices by an estimated $3 to $4 per barrel. They noted that additional geopolitical escalation might drive prices up to $72 a barrel for Brent. An unanticipated decline in crude inventories in the United States, the largest oil consumer globally, further bolstered prices. U.S. crude inventories decreased by 2.3 million barrels to 423.8 million barrels in the week ended January 23, according to the Energy Information Administration, contrasting with analysts’ expectations in a Reuters poll for an increase of 1.8 million barrels.

This development indicates that the short-term supply-demand equilibrium has become more constrained, highlighting consistent refinery demand alongside limited barrels accessible to the market,” stated Linh Tran. In summary, Citi indicated that oil prices could remain high due to increasing Geopolitical risks, U.S. restrictions on Russian oil purchases, and ongoing Chinese buying persist, despite market expectations of a significant oversupply as the year commenced.